Yahoo CEO Scott Thompson’s forgivable sin

We’ve all had a little time to breathe after the disclosure last week that Yahoo CEO Scott Thompson embellished his resume. Despite saying he received an undergraduate computer science degree, he in fact did not. And while rising through several positions of increasing responsibility for years, he allowed those vetting his suitability to believe otherwise.

So far Yahoo has said Thompson was guilty of an “inadvertent error” and that it was reviewing the matter. Third Point, the activist shareholder who revealed what had apparently been hiding in plain sight and is trying to grab spots on Yahoo’s board, is now demanding that Yahoo fire Thompson.

Is this what’s best for Yahoo? I doubt it. Is Scott Thompson what’s best for Yahoo? I don’t know. It’s too early to say. And that’s the point.

The company is on its third CEO in as many years, and he’s been on the job one day short of four months. You don’t get from here to there overnight, no matter who’s in charge, and you don’t get from here to there at all if you are constantly taking detours.

Thompson was hired for whatever talents and abilities he’s displayed since college, not for ostensibly logging computer lab time in his teens. Sure, lying on your resume is not a good thing, and it shouldn’t be rewarded. But in the grand scheme of things it doesn’t rate.

The strongest argument I’ve seen for dumping Thompson is some variation of “he no longer has the credibility to lead.” Well, let’s wait and see. It’ll be clear soon enough if he’s being dissed, ignored or undermined. That’s for his direct reports to sort out, and for the board to react to. CEOs don’t tend to be let go because workers won’t play nice with them. CEOs are canned by boards impatient for results or by internal rivals.

Not every offense is a firing offense, and injured parties are actually entitled to try to reconcile. A serious rift can actually lead to stronger ties – Thompson could be just one really heart-on-his-sleeve Town Hall away from firmly establishing his cred. (On Monday he wrote to all Yahoo employees to say, “I want you to know how deeply I regret how this issue has affected the company and all of you.”)

Yahoo, despite all the drama, remains a worthwhile enterprise. It’s Comscore’s number three Web property (after Google and Microsoft).

Thomson might still fail, by whatever metric the Yahoo board thinks matters: an inability to increase shareholder value, a failure to convert hundreds of millions of Yahoo users into a community, a reluctance to establish Yahoo as a player in mobile, whatever. But not because he doesn’t have a computer science degree.

It is pretty clear what the law has to say about the Thompson matter. Yahoo directors have a fiduciary responsibility to act in the shareholders’ best interest. Unfortunately, the author have this article has very different advice for the company directors. He advises that the directors should gang up against shareholders to protect Thompson from accountability.

Thompson’s alleged deception is an insult to anyone who spent the time, money and effort to actually earn a degree. One can see why Thompson is doing this. His alleged lies have allowed him to rake in millions of dollars by fooling people.